Unlike eBay’s earlier similar deal with Yahoo for the US market that doesn’t involve Skype, this deal with Google features Skype as the vehicle that would allow eBay users to call the merchants to complete the transaction. For the international market, especially eBay’s fast growing markets in Asia, this makes a lot of sense. Despite years of infrastructure build out, cost of telephone call is still considerably higher there than developed countries. Skype’s VOIP calls give users there a realistic cheap alternative. On top of that, Skype already have a huge user base in these emerging markets.

This is still early stage of Click-to-Call’s development. However, it appears that both eBay and Google are willing to bet its potential to open up lucrative stream of ad revenue down the road.

What does this move mean for existing Click-to-Call players in the field? Quite a few companies, such as Jambo, Miva, eStara, have been working for years on this concept with varying degree of success. This development is certainly a strong endorsement of the business model. However, given the enormous reach of both these companies, every in the field certainly can feel the pressure.

A lot of companies are doing the bidding. Besides search engines like Google and Yahoo that are offering local services with maps, coupons and other features, many startups are aiming at that space as well. Websites such as InsidePages and Judy’s Book are creatinglisting services with social networking features that let consumers create feedbacks. They emphysize the “word-of-mouth” aspect of finding services.

My previous post looked at the current numbers for online and YP accesses. However, the very fact that Yellow Pages are everywhere indicates from a distribution perspective YPs have reached saturation – there is no untapped markets left for them to deliver their product. The only hope of growth is to get more businesses listed in the yellow books and having them placing bigger ad. There they run into their second problem: the yellow book has physical limitations. Any yellow page that is over a couple of inches thick is just not very practical to use.

On the other hand, online services don’t have these issues. One estimate that about 50% of Internet users uses it to look for local services so apparently there area lot of head room. Being online eliminates the size problem altogether. Another advantage of online services are the ability to search – it can be a lot more efficient than browsing if it is done right.

Before you rush out and throw away your Yellow Page book, let’s not forget YPs still have a number of tricks in their bags to fend for themselves. The local ad market is very hard to penetrate. Being the incumbent YPs have an established sales network that gives them the edge. One might argue that this increases the transaction costs and takes away their scalability. That might be true, but one must have penetration before having scalability, especially for newcomers.

Another factor no one should overlook is this: Yellow Pages are closely associated with telephones. You look in Yellow Pages when you want to call somebody. And phone calls are a lot more valuable to merchants than web-clicks. That’s because phone calls typically happens late in the purchasing process, and they give businesses a better chance at closing the deal. Some estimates put the conversion rate of phone calls order of magnitude higher than mouse clicks. That’s why we started seeing online services like Google and AOL begin to experiment with “click-to-call” services.

Promising as online services are, whoever wants to compete with Yellow Pages and create an alternative for finding local businesses will have to find ways to overcome these obstacles.

As Google and Yahoo push their way into the local search with local listing, the eventual demise of print Yellow Pages have be pronounced repeatedly, for example, here and here. And here is a tell-tale picture I came across on Flickr by Larsz which seems to exemplify the down hill slide of Yellow Pages. The very fact that they are laying around at every corner you turn makes it appear to retain very little value. Which self-respecting Googler is going to admit that he is still using the lowly Yellow Pages?

So who uses Yellow Pages now a days?

Well, a lot of us, apparently. According to a July Wall Street Journal article, Americans referred to Yellow Pages over 25 billion times in 2005. In comparison, users conducted 2.7 Billion searches on Google last month. Keep in mind the Google number include ALL searches. Local searches makes up only a fraction of the total number. Here is another set of numbers: Yahoo and Google had combined revenue of about $12B in 2005, whereas Yellow Pages rung up $16B on the local advertising market alone.

Yellow Pages’ numbers appear to be strong. Why are people writing their last rights already?

This is one of the most famous logic-defying street signs in Beijing near the 2nd Ring Road that started to circulate on the Web a few months ago. Good luck finding your way to make a right turn. Numerous tales of drivers got lost or fined by the police for making a wrong move have filled BBS’s.

Then I came aross this accompanying image on the left. Trace the yellow line to make a right turn. Avoid the red line – it’s a sure way to get booked by the cops. Clear now? Bloggers are surely a resourceful bunch, aren’t they?

I was rather intrigued and went on Flikr for more strange street signs. Well, I wasn’t disappointed. Here, here, and here.

Here is another angle: There are two main ministries in China with regulatory power over internet: the Ministry of Information Industry (MII), which covers mostly telecommunications, and the Ministry of Radio, Film and Television (SARFT), which oversee the media industry. Guess what guys, the transition of old media onto Internet everyone is raving about has created a bit of tug of war between these two ministries. Last year MRFT shut down several IPTV trials conducted by telcos owned by MII.

To read events in China, I always keep one thing in mind: since so much of the economy is still state owned, many of the activities conducted by private enterprises or organizations in this country are carried out by the government in China. So we constantly encounter stories like these where a government agency issues regulations to protect the monopolistic status of industries under its watch. Of course, “decency” is a word all censors use defetly when it comes to curbing freespeech.

This must be a bitter sweet moment for Dell. The old saying is that imitation is the highest form of flattery. Dell should take pride that its execs are highly valued by its rivals. However these departing execs clearly saw better opportunities elsewhere. In quick succession Dell has lost its key players in AP, China and Japan. The Asian market will be the next battle ground for the PC makers with sales in India expected to explode. This can’t sit well with Dell.

Just earlier this week, Dell announced recall of four million laptops to replace batteries that are prune to catch fire.

After one false move at the security check at Dulles Airport last month, my Treo 650 flew off my belt clip and landed on the concrete floor. I have dropped other cell phones on the floor countless times without breaking any of them, but I guess the large screen size of the Treo seems to make it particularly vulnerable. Either way, I was staring at the picture on the left when I picked it up.

Now I love my Treo. Of all the “smart phones” I tried, nothing comes close to Treo to its usability. Save for an early reboot glitch that was fixed by a patch, my Treo has performed very well for me. Faced with a $300 price tag for new unit, I started to look for alternatives. A clerk at a neighbourhood phone shop offered to replace the screen for me for $150, parts+labor. That’s when I realized there are screen replacement parts I can get. I quickly found one for sale on eBay for $49. After getting the delivery all I need is to figure out how to put the new one in.

That’s where YouTube comes in.

I found a video clip showing exactly just that on YouTube. With 10 minutes my Treo is back in business, with a shiny new screen. Total cost: $49. Additional benefit? A new found appreciation for YouTube.

The Wall Street Journal reported a story (subscription needed) about people buying up cheap prepaid cell phones and resale them for quick profit. After years of pushing for annual contracts, US mobile carriers suddenly discovered the benefits of pay-as-you-go services and started pushing it by handing out heavily subsidized cell phones. It is rather odd that marketers at these carriers were caught by surprise since the arbitrage opportunity is quite obvious.

Pay-as-you-go services have been popular in Asia for years. In my previous life I needed to travel to China and HK frequently. The choices for were either to pay the $2.5/minute Cingular slapping on me for international roaming, or to give up on the idea of using cell phone all together. Luckily, the local carriers in those places offered me an alternative: I would buy a SIM card at the airport with a local phone number, pop it into my GSM phone and ready to go. I buy minutes in chunks which costs me about $0.2/minute depending on which country I am in. Considering my local friends and colleagues can reach me on a local instead of an international number, it is a bargain all around.

What’s interesting about the WSJ article is the carriers are selling a handset for this service. So I would have to buy a phone if I wanted this service here. This is a direct result of the “walled garden” approach these carrier practiced for years. In the US market, carriers wield enormous power over phone manufacturers. Carriers decide which models can be used, and in many cases which features can be turned on. Most of the handsets are locked – it works only on one carrier’s network.

This walled garden approach will hurt the carriers, as the article illustrates. Ultimately, man-made barriers make developing applications for cell phones a mini water torture. (I know because I am in the thick of it.) You are forced to deal with one carrier, one platform, one manufacturer, even one model at a time. Speaking of choking off the innovation.

Woke up to the news that China Mobile is now the world’s largest telecom carrier in terms of market value, surpassing former leader Vodafone. Although China Mobile has had more subsribers than Vodafone for a while, it has less revenue $31B vs. $45B, and until recently is an almost exclusively Chinese market operator whereas Vodafone has a more global foot print. A closer look at some other KPIs, such as ARPU (Average Revenue per User), China Mobile trails Vodafone ~$25/month vs. ~$36/month in the latest quarter. And majority of China Mobile’s revenue comes from voice services, not the new sexy data services. So what gives?

Many attributed this high valuation to the growth expectations of the Chinese telecom market. This certainly is a factor – cell phone penetration rate in China is about 25%, comparing to >60% rate of the developed countries in which Vodafone operates. However I think investors have already learned to avoid the trap of multiply whatever revenue by 13 Billion to estimate the Chinese market: the 300 million cell phone users in China today represents most of the urban affluent population. In terms of total addressable market, there is not a vast void as the 25% penetration rate suggests.

The main driver for this high valuation is the strong competitive position China Mobile occupies in the Chinese market. Although there is a second mobile operator in China (China Unicom), China Mobile is by far the dominate player in China. It has been pushing others around with ease, be it competitors, content providers or value-added service proviers (SP). One clearly indication of this market power is the extremely high margin China mobile maintains: EBITDA margin of 54% vs. Vodafone’s 36%. As the flagship operator of the Chinese government, China mobile also enjoys strong backing of the government. This virtual monopoly is what the market paying the premium for.

However backing from the government is not without its drawbacks: top management of Chinese telcos are subject to frequent shuffling. For example, current CEO of China Mobile was the CEO of China Unicom, its main competitor, until he was re-appointed to his current post. Although they are independent companies in their own right, in the eyes of the administration, China Mobile and China Unicom are more like two departments of a single organization. Management talents are on a rotation program and can be freely moved among different telcos.